It is the first foreign bank to have been granted approval.
In a release, Standard Chartered Bank (China) Limited announced that it was the first foreign bank to have been granted approval for a RMB denominated loan quota on behalf of a leading American multi-national company (“MNC”) client that specialises in global manufacturing and technology.
The approval of the RMB 3.3 billion cross-border lending quota from People’s Bank of China (PBOC) Shanghai Branch is part of a pilot program that supports foreign and local MNCs which have plans to channel surplus RMB capital in mainland China to fund RMB denominated activities overseas.
This scheme has transformed the lending of RMB between companies from one based on a traditional entrustment loan (with banks as intermediary agents) to one where two parties sign lending agreements directly, agree interest rates and manage the loan drawdown themselves.
In addition to ensuring that the submitted application met the various key requirements (satisfactory cross border lending rate, tax requirements, ability to monitor the utilisation of the quota etc.) set out by PBOC, Standard Chartered is responsible for proposing the most efficient cross border lending structure to support its client’s business goals.
The quota is expected to support the MNC’s Chinese Office’s ability to lend RMB to its overseas parent or other related companies which can in turn settle RMB denominated invoices.
George Nast, Global Product Head of Transaction Banking, Standard Chartered, said, “The RMB cross-border lending programme is a significant milestone of the RMB’s journey of internationalisation. This programme will bring greater efficiencies and control to Shanghai based treasury centers where corporations can negotiate for better lending frequency and rates that match their actual needs. We are extremely proud to have been a key participant in the pilot programme as it has allowed us to execute on our client centric strategy and deliver greater efficiencies to our client’s treasury management processes through our global liquidity management capabilities which offer unprecedented visibility and utilisation of cross-border flows in emerging markets.”
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